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Provision of Senior Expertise regarding IPARD – Instrument for Pre-Accession Assistance in Rural Development

Bosnia and Herzegovina

Fund Management, Natural Resource Management, Environment and Climate Change, Market Development, Agriculture, Natural Resource Management

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The assignment was carried out as part of ORGUT’s subcontract with Chemonics International within the USAID/Sida project –FARMA in Bosnia-Herzegovina and aimed to raise awareness about the upcoming IPARD program amongst potential applicants (commercial farmers, SMEs, cooperatives) as well as relevant organizations (such as NGOs, development agencies, chambers of commerce, municipalities and consultancy services), focusing on the transfer of experience about the process of IPARD application, project approval, project implementation and monitoring.

The purpose of USAID/Sida FARMA is to provide technical assistance in agricultural sub-sectors through demand driven assistance aimed at improved competitiveness of agricultural products. USAID/Sida FARMA is a development project jointly funded by USAID and Sida and implemented in Bosnia and Herzegovina. USAID/Sida FARMA is to expand environmentally sustainable production, processing, and sales of value-added agricultural products. The expected result of FARMA is contribution to poverty reduction. USAID/Sida FARMA is implemented by Chemonics International with ORGUT as a subcontractor. ORGUT provides consulting services aiming at increasing agricultural competitiveness, meeting EU accession standards, reducing poverty by expanding environmentally sustainable production, and increasing sales, exports, and employment. USAID/Sida FARMA’s approach focuses on four integrated components: Building sustainable market linkages for producers; Increasing access to finance; Building the capacity of producer organisations’ and other counterparts; and Enhancing the policy environment to benefit competitiveness of agricultural goods. In order to attain project goals, USAID/ Sida FARMA uses various tools, including a Development Fund and Partners Fund for targeted subcontracts to local partners.

Rural poverty is a chronic problem in Bosnia and Herzegovina, where up to 25% of rural households are facing poverty. Agriculture is characterized by small farm units, low productivity and low farm incomes. A large number of farms are subsistence farms. In addition, rural infrastructure is poor and underdeveloped, which negatively affects competitiveness in rural areas.

From an EU perspective, because of agriculture’s importance as a share of the Gross Domestic Product (GDP) and the high number of people active in agriculture, agriculture was and still is one of the most complex, sensitive and critical areas in the EU enlargement context. With the Rural Development component of the Instrument for Pre-accession Assistance (IPA), candidate countries are being assisted through a particular instrument called IPARD – Instrument for Pre-Accession Assistance in Rural Development. The objectives of IPARD are: to increase competitiveness by modernizing production and reducing production costs, to ensure the durability of agricultural production and increase quality of life in rural areas (keeping young), adjusting to EU legislation through promotion of hygiene, veterinary and environmental standards. Bosnia and Herzegovina is expected to be eligible for IPARD funding country over the next 1-2 years.

Past experience shows that most candidate countries had a very low readiness to absorb EU rural development funds when available, which is missed opportunity for agricultural and rural development. This means that when IPARD (or similar funds) become available they will not be spent well (or maybe not at all) due to the lack of viable projects and development needs will not be met. The main problem is the low level of appropriate project development skills amongst the organizations and individuals who will be required to lead rural development project development and delivery. Currently such skills are at a very low level in most of the organizations that will be involved in developing and running BiH rural development projects (cooperatives, private sector advisors, development agencies, extension service workers, etc). Lessons learned from implementation of SAPARD (Special Accession Program for Agriculture and Rural Development) program in Croatia in the period from 2006-2009, showed that one third of all applications were rejected due to incomplete documentation. Total number of received applications in SAPARD in Croatia was 139, out of which 37 projects received funds. It resulted in use of SAPARD funds with 48%, while amount of available funds was approx. 33 million EUR. IPARD program is available in Croatia from 2007 to 2013. Total amount of available finding is approx. 156 million EUR, however until 2012 only 3% of available funds were disbursed. Two main reasons for such a low use of funds are the lack of information about programs that could be financed and complexity of the application process.

In Bosnia and Herzegovina, there has been insufficient effort to raise awareness about the IPARD program, despite the importance of IPARD funding to the development of agriculture in Bosnia and Herzegovina and the experience of other countries with low utilization rates. This needs to change to ensure Bosnia and Herzegovina benefits from future IPARD funding and therefore it is essential to raise awareness about IPARD funding opportunities among the rural communities.